Demand, supply and price
G3 Economics - syllabus K343, 2027
How markets work, what shifts demand and supply, equilibrium, and why prices change.
- What a market is and who takes part
A market is any place or arrangement where buyers and sellers exchange goods or services.
- Demand and the demand curve
Demand is what buyers are willing and able to buy at each price; a lower price raises quantity demanded.
- What shifts demand
Changes other than the good's own price, such as income or the price of related goods, shift the demand curve.
- Supply and the supply curve
Supply is what sellers are willing and able to sell at each price; a higher price raises quantity supplied.
- What shifts supply
Changes in costs, technology, weather, the number of firms, and taxes or subsidies shift the supply curve.
- Equilibrium, shortages and surpluses
At equilibrium, quantity demanded equals quantity supplied; at any other price there is a shortage or a surplus.
- How the price mechanism answers what, how and for whom
Prices signal what people want, reward producers who supply it, and ration goods to those willing and able to pay.
- Causes and consequences of price changes
Shifts in demand or supply change the equilibrium price, which changes how much is bought and sold.
- Put it together: Allocate concert tickets
A popular band announces one concert. 50,000 fans want tickets but the stadium holds 20,000. At the planned price of $150 there is a shortage. Compare ways of deciding who gets in.
What you will be able to do
I can define a market, give examples, and describe what buyers and sellers do in it.
Syllabus K343, 2.1.1. How markets work: definition of a market; examples of markets; roles of buyers and sellers
Taught in What a market is and who takes part
I can define demand, link one buyer's demand to market demand, and draw a demand curve.
Syllabus K343, 2.2.1. Individual and market demand: definition of demand; link between individual demand and market demand; drawing and interpretation of the demand diagram
Taught in Demand and the demand curve
I can explain and draw extensions and contractions of demand as movements along the curve.
Syllabus K343, 2.2.2. Movements along a demand curve: causes of extensions and contractions in demand; diagrams that illustrate movements along a demand curve
Taught in Demand and the demand curve
I can explain and draw increases and decreases in demand as shifts of the curve.
Syllabus K343, 2.2.3. Shifts of a demand curve: causes of decreases and increases in demand; diagrams that illustrate shifts of a demand curve
Taught in What shifts demand
I can define supply, link one seller's supply to market supply, and draw a supply curve.
Syllabus K343, 2.3.1. Individual and market supply: definition of supply; link between individual supply and market supply; drawing and interpretation of the supply diagram
Taught in Supply and the supply curve
I can explain and draw extensions and contractions of supply as movements along the curve.
Syllabus K343, 2.3.2. Movements along a supply curve: causes of extensions and contractions in supply; diagrams that illustrate movements along a supply curve
Taught in Supply and the supply curve
I can explain and draw increases and decreases in supply as shifts of the curve.
Syllabus K343, 2.3.3. Shifts of a supply curve: causes of decreases and increases in supply; diagrams that illustrate shifts of a supply curve
Taught in What shifts supply
I can explain how prices answer what to produce, how to produce it, and who gets it.
Syllabus K343, 2.4.1. Price mechanism: how the price mechanism provides answers to the basic resource allocation decisions of what, how and for whom to produce
Taught in How the price mechanism answers what, how and for whom
I can find market equilibrium from a schedule or a diagram.
Syllabus K343, 2.4.2. Market equilibrium: equilibrium price and equilibrium quantity in a market: definition of market equilibrium, interpretation of equilibrium using demand and supply schedules, drawing and interpretation of equilibrium using demand and supply curves
Taught in Equilibrium, shortages and surpluses
I can explain disequilibrium, and show shortages and surpluses on a schedule or a diagram.
Syllabus K343, 2.4.3. Market disequilibrium: disequilibrium prices and quantities, definition of market disequilibrium, interpretation of disequilibrium using demand and supply schedules, drawing and interpretation of disequilibrium using demand and supply curves; shortages (demand exceeding supply) and surpluses (supply exceeding demand)
Taught in Equilibrium, shortages and surpluses
I can explain how changes in demand and supply cause prices to change.
Syllabus K343, 2.5.1. Causes of price changes: how price changes are caused by changes in demand and supply
Taught in Causes and consequences of price changes
I can use demand and supply diagrams to show how a price change affects sales.
Syllabus K343, 2.5.2. Consequences of price changes: effect of price changes on sales; use of demand and supply diagrams to illustrate the impact of changes in market conditions
Taught in Causes and consequences of price changes